Restraint Of Trade

Tyson Settles Consumer Class Action Lawsuit Challenging “Raised without Antibiotics” Ads

Tyson Foods Inc. has agreed to settle a consumer class action lawsuit challenging its advertising claim that Tyson chickens are “Raised without Antibiotics.”  Contrary to consumer expectations, Tyson feeds its chickens a mix that includes ionophores, which the U.S. Department of Agriculture consider to be antibiotics. 

The current settlement agreement provides as much as $50 to some individual customers, and up to $20,000 in incentive awards to four named plaintiffs and four class members deposed last year.   Among the named plaintiffs is a woman who purchased Tyson’s “Raised without Antibiotics” chicken out of concern for her husband, who had a heart transplant.  James J. Pizzirusso, class counsel and a partner at Hausfeld LLP in Washington, D.C., described the agreement as a “meaningful settlement that has real value . . . not just a 50-cent-off coupon placed in the Sunday paper.  It’s about getting money in the hands of consumers and deterring this kind of conduct in the future.”

The class includes individuals who purchased fresh or frozen Tyson chickens, Cornish hens, and deli meat between June 19, 2007, and April 30, 2009, as well as those who purchased prepared chicken products between Nov. 1, 2007, and April 30, 2009.  The parties propose to notify the class by placing ads in the magazines People and Parade, as well as on various popular news and entertainment web sites. 

On Friday, January 15, 2010, Judge Richard D. Bennett will hold a hearing to determine the fairness of the proposed settlement agreement.  

Read more coverage in the Maryland Daily Record. 

Germany Considers Stricter Competition Rules

German Economy Minister Rainer Bruederle will introduce legislation next month that would enable the government to break up any company that uses its dominant position to impair competition.  Under the terms of the bill, Germany’s Federal Cartel Office could force companies to sell parts of their business as an emergency measure to “boost or allow competition to the benefit of consumers and the overall economy.”  In a document addressing the proposed competition rules, the Ministry wrote that this approach “addresses such cases where antitrust law is breached and where this can only be ended effectively and appropriately by intervening in the company structure.”  Furthermore, the document continued, “this addresses highly concentrated, economically important markets where no concrete violation may have been recorded but where there's no or hardly any competition even though competition is technically possible and economically sensible."

Although this latest step will affect all industries, many believe that it is aimed at Germany’s utility companies.  The nation’s four largest energy companies—E.ON AG, RWE AG, EnBW Energie Baden-Württemberg AG and Vattenfall Europe AG—produce more than 80% of Germany’s electricity.

Read more coverage in the Wall Street Journal and at Bloomberg.com.

Has the Supreme Court Limited Americans' Access to Courts?

The Senate Judiciary Committee holds a hearing this morning entitled “Has the Supreme Court Limited Americans' Access to Courts?”  The witness list includes:

John Payton
President and Director-Counsel
NAACP Legal Defense Fund
Washington, D.C.

Gregory G. Garre
Partner
Latham & Watkins, LLP
Washington, D.C.

Stephen B. Burbank
David Berger Professor for the Administration of Justice
University of Pennsylvania Law School
Philadelphia, Pennsylvania

View the live webcast of the hearing here.

Read a written statement, to be included in the record, from Michael D. Hausfeld, Chairman, Hausfeld LLP, here.

EU President Selects Spanish Socialist Joaquin Almunia as New Antitrust Chief

European Commission President Manuel Barroso announced yesterday his choice of Joaquin Almunia to succeed Neelie Kroes as Europe’s new competition commissioner.  Barroso, a former member of the Spanish Parliament (1979 to 2004) and one-time socialist candidate for Spanish prime minister (2000), arrives at a time of vigorous antitrust enforcement in Europe.  During Kroes’ five-year tenure, the EC imposed record-breaking fines against chip manufacturer Intel Corporation for abusing its dominant position and European utilities E.ON AG and GDF Suez for market allocation.  The European Parliament, which is scheduled to hold hearings in January, must first approve Almunia before he can begin his four-year term. 

Read more coverage here and here.

Canadian Courts Increasingly Receptive to Class Certification

Recent class-action decisions in two closely watched Canadian cases suggest that Canadian courts may be more receptive to the class mechanism than in the past.  Previously, only a handful of Canadian antitrust class actions had progressed to a contested motion for class certification.  And, in those that had, courts denied the motion, often citing the need for more rigorous expert analysis of loss and liability on a class-wide basis.  But in September 2009, in Irving Paper Ltd. v. Atofina Chemicals, the Ontario Superior Court of Justice certified a class amid allegations of price-fixing by hydrogen peroxide producers.  Two weeks later, in Pro-Sys Consultants Ltd. v. Infineon Technologies AG, the British Columbia Court of Appeal reversed a lower court decision and certified a class in a case involving allegations of price-fixing among DRAM memory-chip makers.  Justice Smith observed that the lower court had erred in subjecting the plaintiff’s expert evidence to “rigorous scrutiny” at the certification stage.  “[T]his approach was fundamentally unfair at this stage of the proceeding,” Justice Smith wrote, “when the appellant has not had discoveries and an adequate opportunity to marshal the evidence required by [the expert] for his analysis.”  All that is required, according to the opinion, is “a credible or plausible methodology” for determining damages on a class-wide basis. 

Both decisions are significant because they are the first instances of Canadian courts—both trial and appellate—certifying classes in multilateral price-fixing cases over opposition from defendants.  Pro-Sys, moreover, is noteworthy for its treatment of direct and indirect purchasers and its decision to certify a consolidated direct and indirect purchaser class.  Although it is too early to predict with much accuracy, many in the Canadian legal community expect that these decisions will lead to increased class-action antitrust litigation in Canada, particularly where there are complementary cases proceeding in the United States. 

Read the court’s decision in Pro-Sys Consultants Ltd. v. Infineon Technologies AG here.

Read more coverage here.

Grand Jury Indictment in Municipal Derivatives Price-Fixing Case

The government’s year-long investigation of price-fixing in the municipal derivatives industry is finally starting to bear fruit.  A federal grand jury in Manhattan recently indicted CDR Financial Products Inc., and its founder David Rubin, as well as two company employees, for rigging bids and accepting kickbacks from financial firms who reaped supracompetitive profits from investment products sold to local governments.  The indictment alleges that CDR and its employees, who were routinely hired by local governments to solicit competitive bids for investments, guided contracts towards certain firms---all at the expense of U.S. taxpayers.  According to the allegations, CDR would determine who would win investment contracts in advance and then solicit sham bids from other actors in an effort to hide the conspiracy. 

"This case is fundamentally about collusion, the illegal rigging of a purportedly competitive bidding process," explained Joseph M. Demarest, Jr., Assistant Director in Charge of the FBI's New York Division.  "The result was lower rates of return on the investment of bond proceeds for the state and local governments that hired CDR.  In this climate of economic austerity, the conduct of the defendants and co-conspirators seems particularly predatory."

Fifteen months ago, Hausfeld LLP - along with other co-lead counsel Boies, Schiller & Flexner LLP and Susman Godfrey LLP - filed a nationwide class action lawsuit on behalf of several state, local and municipal governments against thirty-seven leading banks, insurance companies, and brokers alleging widespread price-fixing and bid-rigging in the trillion-dollar municipal derivatives industry, dating back to 1992.  Michael D. Hausfeld, Chairman of Hausfeld LLP, hailed the recent indictment, explaining that "the collusion orchestrated by CDR Financial and major financial institutions extends back several years in what has become a trillion-dollar-a-year industry victimizing dozens of states, counties and cities.  We fully support yesterday's action by the DOJ as it reaffirms allegations we have made against these defendants in the civil antitrust complaint, and further undermines claims made by CDR Financial that there is no basis for the case against them."

Read the indictment here.

Read more coverage here.

American Antitrust Institute and 35 Other Groups Petition Congress to Restore the Federal Pleading Standard

As many practitioners can attest, thet Supreme Court's decisions in Twombly and Iqbal have thrown a wrench into pleading practice.  The cumulative effect of these decisions is to permit individual judges to exercise their "common sense" to determine whether a case is "plausible" enough to proceed - with the predictable result that important cases in the competition field and beyond are being thrown out without even having a chance to test their allegations in discovery.  The impact of these decisions on the ability of aggrieved claimants to seek redress has been profound.

There is growing recognition that these decisions are a problem.  On October 26, the American Antitrust Institute (AAI) and 35 other groups sent letters to members of the House and Senate Judiciary Committees in attempt to restore the Conley v. Gibson pleading standard.  The letters, which can be viewed here (House Letter & Senate Letter), summarize the impact of the heightened pleading standard that has resulted from the cumulative effect of Twombly and Iqbal.  The letters also emphasize the growing concern that access to justice has been significantly reduced as otherwise meritorious claims are now increasingly dismissed.

The Effects of ACPERA on Civil Antitrust Litigation

Hausfeld LLP recently published "Observations from the Field:  ACPERA's First Five Years" in the Sedona Conference Law Journal.  The article examines the real world impact of the Antitrust Criminal Penalty Enhancement And Reform Act of 2004 ("ACPERA") on civil antitrust litigation in its first five years, as well as raises questions about its future application.  The article is currently available for download on Westlaw.

 

House Judiciary Committee to Hold Hearing Tomorrow on the Effects of Iqbal and Twombly on Pleading Standards

On Tuesday, October 27, the House Judiciary Committee will be holding a hearing entitled "Access to Justice Denied: Ashcroft v. Iqbal."  This hearing comes after the recent introduction of Senator Specter's proposed bill that, at least in its initial form, calls for a reversion back to the Conley v. Gibson pleading standards. 

The witnesses at tomorrow's hearing include NYU Law Professor Arthur Miller, Former Assistant Attorney General Gregory Katsas, John Vail of the Center for Constitutional Litigation, and Debo Adegbile of the NAACP Legal Defense and Educational Found.  The prepared testimonies of Arthur Miller (click here) and John Vail (click here) highlight the limiting effect of the heightened Iqbal/Twombly pleading standards on plaintiffs' access to federal courts.  This will be an important debate to monitor over the coming months as the legislature ponders whether it wishes to intervene in the discussion over what constitutes a sufficient complaint.

Successes (and Risks) of Private Enforcement

  Too much attention is paid these days to the supposed dangers of over-zealous private enforcement of the antitrust laws, which can supposedly lead to innocent companies having to pay large settlements out of fear of large class action lawsuits. 

  Corporations, of course, have an incentive to promote this storyline and, though it lacks any meaningful empirical support, it has led to dramatic changes in pleading standards - changes which are designed to make it harder for aggrieved small businesses and consumers to get a hearing on their claims in federal court.

  In this context, it is helpful to be reminded of the real need for private enforcement, as well as the risks faced by private litigants.  Too often it is assumed that only corporate defendants face risks in complex litigation.

  Leave it to Page 6 of the Post to cover a story ignored by most media outlets:

Lloyd Constantine, in whose office young law school grad Eliot Spitzer interned and who became mentor/ adviser/consigliere throughout the man's historic leap into and out of New York's governorship, has a book party tonight. His vivisection of Spitzer's downfall comes out shortly. The one he's partying tonight, also about a downfall, is "Priceless: The Case That Brought Down the Visa/MasterCard Bank Cartel." It's also the landmark class action suit his law firm won, which made him personally such a bunch of millions that he need never never ever work again.

"This seminal Visa/Mastercard case was a David and Goliath battle, and this country's largest antitrust case ever," he told me. "Competition is the heart of America, and our win protected America's economic system by ending a giant anti-consumer conspiracy.

"In 2003 dollars, the settlement was $3.4 billion. The court estimated in 10 years alone this would save stores and shoppers $87 billion."

...

And the government's role in this?

"None. No help. Private enforcement can beat big case litigation, but that's providing dedicated counsel is willing to bet their careers."

The article is here